Objective: To determine whether the faster recovery after early surgery for sciatica compared with prolonged conservative care is attained at reasonable costs. Design: Cost utility analysis alongside a randomised controlled trial. Setting: Nine Dutch hospitals. Participants: 283 patients with sciatica for 6-12 weeks, caused by lumbar disc herniation. Interventions: Six months of prolonged conservative care compared with early surgery. Main outcome measures: Quality adjusted life years (QALYs) at one year and societal costs, estimated from patient reported utilities (UK and US EuroQol, SF-6D, and visual analogue scale) and diaries on costs (healthcare, patient's costs, and productivity). Results: Compared with prolonged conservative care, early surgery provided faster recovery, with a gain in QALYs according to the UK EuroQol of 0.044 (95% confidence interval 0.005 to 0.083), the US EuroQol of 0.032 (0.005 to 0.059), the SF-6D of 0.024 (0.003 to 0.046), and the visual analogue scale of 0.032 (-0.003 to 0.066). From the healthcare perspective, early surgery resulted in higher costs (difference €1819 (£1449; $2832), 95% confidence interval €842 to €2790), with a cost utility ratio per QALY of €41 000 (€14 000 to €430 000). From the societal perspective, savings on productivity costs led to a negligible total difference in cost (€-12, €-4029 to €4006). Conclusions: Faster recovery from sciatica makes early surgery likely to be cost effective compared with prolonged conservative care. The estimated difference in healthcare costs was acceptable and was compensated for by the difference in absenteeism from work. For a willingness to pay of €40 000 or more per QALY, early surgery need not be withheld for economic reasons. Trial registration: Current Controlled Trials ISRCTN 26872154.